Usually, a small seller must register for GST before making a taxable inter-State sale of goods, even when turnover is below the ordinary registration threshold. Section 24 of the Central Goods and Services Tax Act, 2017 (CGST Act) lists persons making inter-State taxable supplies as compulsory registrants. That rule has statutory and notification-based exceptions, so the answer depends on whether you sell goods or services, whether the supply is taxable, whether you qualify for a notified exemption, and whether an e-commerce operator is involved.
The short answer: start with compulsory registration
If you sell taxable goods from one Indian state to a customer in another state, treat GST registration as compulsory unless a specific, current exemption covers your transaction. The ordinary turnover threshold does not automatically protect an inter-State seller from section 24 of the CGST Act.
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This is different from the usual threshold analysis for a seller operating only within one state. Section 24 operates as a compulsory-registration provision. In practical terms, a business with modest sales can still have a registration obligation because of the nature and destination of its supply, not because it has crossed a particular sales figure.
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Do not apply that conclusion mechanically to every interstate transaction. A sale of exempt or non-taxable items, a qualifying inter-State service, certain handicraft supplies, and some e-commerce arrangements can follow different rules. The correct first step is classification, followed by a check of the notification that applies on the date you make the supply.
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Classify the supply before checking turnover
Taxable goods shipped to another state
For taxable goods sold across state borders, the safest starting position is compulsory registration under section 24. This applies even if your aggregate turnover is below the ordinary threshold that people commonly quote for small businesses.
For example, a sole proprietor selling taxable home accessories from Maharashtra to a customer in Karnataka cannot assume that a low annual turnover removes the GST obligation. Unless a specific exemption applies to the goods, the interstate nature of the taxable supply is the decisive issue.
Registration is not made optional merely because the buyer is an individual, the order was received through social media, or the seller has only a few interstate orders. The relevant questions are whether the supply is taxable, whether it is inter-State under GST rules, and whether an exemption notification covers the seller and the transaction.
Services can have a different outcome
Goods and services do not receive identical treatment. CBIC’s sectoral guidance describes a conditional exemption for certain suppliers of inter-State taxable services. The exemption is threshold-based and applies only when its stated conditions are met.
The figures cited in that guidance are ₹20 lakh, and ₹10 lakh for specified states in the relevant service-supplier exemption context. These are not a single nationwide threshold for every service provider. The service classification, the state involved, the supplier’s aggregate turnover and the wording of the applicable notification all matter.
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A consultant, designer or other service provider should therefore identify the exact exemption notification before deciding to remain unregistered. If any condition fails, the general compulsory-registration rule may apply.
Exempt and non-taxable supplies
Section 24 addresses inter-State taxable supplies. If the transaction is wholly exempt or outside the scope of GST, the analysis can change. Product descriptions such as “handmade,” “educational,” or “essential” do not by themselves establish exemption; the GST classification and the relevant exemption entry must support that conclusion.
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How the ordinary turnover threshold interacts with interstate sales
The ordinary threshold is often used as a shortcut: below the threshold means no registration. That shortcut is unsafe for an inter-State taxable supply because section 24 can override the threshold-based approach.
| Seller or transaction type | Starting GST position | Qualification to verify |
|---|---|---|
| Taxable goods supplied from one state to another | Compulsory registration is the starting rule | Check whether a specific notification creates an exception |
| Certain inter-State taxable services | A conditional threshold-based exception may be available | CBIC material refers to ₹20 lakh, or ₹10 lakh for specified states, subject to the notification’s conditions |
| Qualifying inter-State handicraft goods | A notification-based exemption may be available | Notification 8/2017-Integrated Tax has ₹20 lakh and ₹10 lakh qualifying aggregate-value limits for covered categories and imposes additional conditions |
The table is a screening tool, not a substitute for reading the current notification. There is no reliable universal threshold chart that answers every seller’s case because thresholds and exceptions depend on the supply category, state and legal conditions.
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When the handicraft exemption may help
CBIC Notification 8/2017-Integrated Tax provides an exemption for qualifying suppliers of inter-State handicraft goods. It is not a blanket exemption for every handmade product or every small artisan.
The notification sets qualifying aggregate-value limits of ₹20 lakh and ₹10 lakh for different covered categories and includes additional conditions. Those figures must be read with the notification’s definitions, the list of eligible goods and the documentation requirements. A seller cannot rely on the ₹20 lakh figure simply because annual sales are below that amount.
Before using the exemption, confirm all of the following:
- The product falls within the notification’s covered handicraft-goods category.
- The supplier and the mode of supply satisfy the notification’s conditions.
- The relevant aggregate-value limit for the category and state has not been exceeded.
- The notification remains in force in its current form and has not been amended.
- Invoices, transport records and other evidence can demonstrate eligibility if questioned.
If one of these points is uncertain, obtaining registration is generally less risky than treating the exemption as automatic. The current amended text should be checked before making a decision for a particular product.
Online marketplace sales need a separate analysis
Selling through an online marketplace does not produce one universal GST answer. CBIC FAQs describe compulsory-registration provisions for certain suppliers using e-commerce operators, along with an exception for certain service suppliers. The result depends on the kind of supply, the operator’s tax obligations and the conditions of the applicable law or notification.
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Ask these questions before listing products:
- Are you selling goods, services or both?
- Is the marketplace acting as an e-commerce operator covered by GST collection or reporting provisions?
- Does the operator collect tax at source or require a GSTIN as a commercial onboarding condition?
- Is your product or service covered by a current exemption?
- Are your sales delivered across state borders, or are all supplies within one state?
A marketplace’s onboarding screen is not legal advice. It may demand a GSTIN for operational reasons even where a statutory exception could apply, or it may not detect a liability that the seller must address independently. Review the current CBIC guidance and the marketplace agreement rather than generalising from another seller’s experience.
A practical decision process for a small seller
- List every product or service. Record the GST rate or exemption status for each item. Do not group taxable and exempt supplies together without checking their classifications.
- Identify the supplier’s state and the customer’s state. Confirm whether the movement or delivery creates an inter-State supply under GST rules.
- Separate goods from services. The conditional service-supplier exception does not automatically extend to goods.
- Check compulsory-registration rules. For a taxable inter-State goods supply, begin with section 24’s registration requirement.
- Search for a specific notification. Review the current wording and conditions for service suppliers, handicraft goods and any other category that appears relevant.
- Check e-commerce provisions separately. Determine whether the operator’s role changes registration, collection or reporting obligations.
- Document the conclusion. Keep the product classification, notification reference, turnover calculation and state details supporting the decision.
- Register before the first liable supply. If no exception clearly applies, use the GST Portal and track the date on which liability arose.
How to register when liability arises
The GST Portal’s normal-taxpayer process uses the online registration application. The exact screens can change, so use the current portal instructions when filing. The usual sequence is:
- Open the GST Portal and choose the registration option for a new taxpayer.
- Select the state or Union territory in which the business is located and enter the legal name, PAN, email address and mobile number.
- Verify the contact details through the portal’s one-time passwords and generate the temporary reference information.
- Continue the application with the business constitution, promoters or partners, principal place of business, additional places, goods or services supplied and bank details requested by the portal.
- Upload the supporting documents the portal asks for, such as proof of constitution, address evidence and authorised-signatory details.
- Submit the application using the permitted electronic verification method and save the acknowledgement reference number.
- Monitor the application for clarification requests and respond through the portal within the stated time.
Use the legal name and address consistently across PAN records, invoices, bank information and the application. Mismatches can create avoidable clarification requests even when the underlying business is eligible.
When the registration becomes effective
For a normal taxpayer, the GST Portal guide states that registration is effective from the date the liability to register arose when the application is filed within 30 days of that date. This makes the trigger date important: keep a record of the first transaction or other event that created the registration obligation.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallIf the application is filed after that period, the effective-date treatment can differ. Do not assume that submitting an application later automatically backdates the registration in the same way. Confirm the current portal rule and obtain professional advice if interstate sales have already taken place.
A casual taxable person follows a different process. The GST Portal describes advance application timing for that category, so a temporary or occasional interstate seller should not use the normal-taxpayer timetable without checking whether the casual-taxable-person rules apply.
Examples that show why the classification matters
Small interstate goods seller
A home-based seller dispatches taxable stationery from one state to customers in several other states. Turnover is below the seller’s expected ordinary threshold. Because the supplies are taxable goods made inter-State, compulsory registration remains the starting position unless a specific exemption applies.
Interstate service provider
A freelance service provider invoices clients in other states. The provider may be able to use the conditional service-supplier exception if the applicable turnover limit and every notification condition are satisfied. The provider must verify the relevant state category and current wording rather than assuming that the goods rule applies unchanged.
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Artisan selling a notified handicraft
An artisan sells products that may fall within the handicraft notification. The artisan must match the actual products to the notification, apply the correct ₹20 lakh or ₹10 lakh qualifying limit for the covered category, and meet the additional conditions. Being handmade alone is not enough.
Marketplace seller with mixed products
A seller lists both taxable goods and exempt items on an online marketplace. The seller must analyse each supply, the operator’s GST role and the current e-commerce provisions. The exemption of one product line does not automatically remove registration obligations for taxable interstate goods.
Common mistakes and how to avoid them
- Using turnover as the only test: Section 24 can require registration before the ordinary threshold is reached.
- Assuming every interstate sale is identical: Goods, services, exempt supplies and handicrafts can follow different rules.
- Treating “handmade” as a legal category: Only products and suppliers meeting the notification’s definitions and conditions qualify.
- Copying another seller’s marketplace answer: Operator arrangements, supply type and current notifications may differ.
- Ignoring the effective date: Waiting to apply can affect when registration is treated as beginning.
- Relying on an old FAQ or notification copy: CBIC FAQs can lag statutory changes, and the CGST Act text or notification may have later amendments.
What to verify before making the first interstate supply
Use the current CGST Act text, CBIC clarification and the latest version of any relevant notification. The CBIC-hosted Act text used for the section 24 rule is an official updated text, but later amendments must still be checked. CBIC’s sectoral FAQs are useful for explaining service and e-commerce distinctions, yet FAQ language should not override a later statutory amendment. Notification 8/2017-Integrated Tax should be read in its current amended form before relying on the handicraft exemption.
If your facts involve multiple states, mixed supplies, prior unregistered interstate sales or a disputed exemption, a GST professional can review the classification and effective date. Keep the written analysis with your registration records so the decision can be revisited when the law or your sales model changes.
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A small seller making a taxable inter-State supply of goods should plan to register for GST even when turnover is below the ordinary threshold. The main exceptions are narrow and conditional: certain inter-State services, qualifying handicraft goods and specific e-commerce situations may receive different treatment. Classify the supply, read the current notification, document the conditions and use the GST Portal within the applicable filing window.
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